When It Makes Sense to Determine Your Credit Score
A low credit rating can make it difficult to buy a house, rent a car, or even an apartment. Fortunately, there are quite simple ways to improve your performance. But sometimes you have to lower your score in order to raise it.
As the saying goes, sometimes you need to break a few eggs to make an omelet. There are several credit tactics that will temporarily worsen your score, but they will pay off in the long run. MyBankTracker lists several cases when it makes sense to top up your loan in order to improve it in the future or just improve your finances in general:
You need to increase your available credit : … every [loan] application counts as a serious request on your credit report. Requests account for 10 percent of your FICO score, and each new message can knock you off five points. So why does it make sense to open multiple accounts if you are trying to get a loan? While requests may remain on your credit report for two years, they only affect your score in the first 12 months. Once you get past the initial downturn, you will see your account grow as long as you maintain a low utilization rate. This means you don’t have to accumulate huge balances on new cards.
You make a terrible deal on one of your cards : Closing your credit card account degrades your account in several ways. First, it affects the overall age of your credit history. The longer you use the loan, the more favorably lenders will treat you. If you close a card that you have had for several years, your average credit age will go down. Another problem with card closure is that it reduces the available credit, which directly affects the utilization rate. However, there are times when holding a card is no longer worth it. For example, if you have a high annual fee bonus card, it could cost you money if you don’t accumulate enough points or miles to cancel it. The same thing happens if you carry over the balance from month to month and you get inflated by the high annual interest rate.
Of course, the best way to improve your credit is to improve your financial habits in general . But a few quick fixes followed by this change in thinking can make a big difference. Check out the full post below.